- DraftKings and the NFLPA have agreed to settle a dispute over NFTs
- The disagreement originated from a 2021 partnership where DraftKings produced collectible NFTs featuring NFL players
- In 2023, DraftKings sought to terminate the agreement, citing legal uncertainties and a decline in the NFT market
DraftKings and the National Football League Players Association (NFLPA) have agreed to settle a legal dispute concerning the use of NFL player likenesses in NFTs. The conflict began with a 2021 collaboration in which DraftKings created and sold NFTs depicting NFL athletes, leading to DraftKings seeking to end the partnership in 2023, pointing to legal challenges and a downturn in NFT popularity. Legal proceedings have now been stayed while the terms of the deal are worked out.
From Handshakes to a Lawsuit
In 2021, DraftKings entered into an agreement with the NFLPA to develop and market NFTs showcasing NFL players. These digital collectibles were then integrated into a fantasy sports platform, allowing fans to buy, sell, and trade them.
However, as the NFT market experienced a decline, DraftKings expressed intentions to discontinue the NFT offerings, citing a court ruling that suggested NFTs might be considered unregistered securities, raising legal concerns. The NFLPA responded by filing a lawsuit, alleging that DraftKings had breached their agreement by ceasing the NFT operations.
NFT Downturn Spooked DraftKings
In its lawsuit, the NFLPA argued that the market downturn did not justify terminating the contract, but DraftKings countered by asserting that the contract allowed for termination under specific conditions, including legal determinations about the nature of NFTs. The case is being heard by Judge Analisa Torres at the United States District Court for the Southern District of New York, the same judge who ruled that XRP tokens are not securities in 2023.
The argument looked set for court, but this might now be prevented, as a filing this week suggests:
The parties have mediated their dispute and reached a non-binding settlement in principle, subject to the mutual execution of a definitive settlement agreement. The parties therefore respectfully request a 60-day stay of this action…to enable the parties to execute a definitive settlement agreement.
This agreement highlights the challenges companies face in navigating the evolving legal landscape of digital assets, which has also manifested itself in the case of NBA Top Shots, which may yet be declared securities thanks to a court case.